Buy Apple

The financial sector is in a semi-meltdown and much of the rest of the economy teeters on the edge of a recession.

But don't tell that to the people at Apple. Today I went to the Apple Store in Bethesda to get a new battery for my old laptop. It was absolutely crammed with customers. Some were buying new iPhones or iPods. And others were like me - just getting something fixed.

What struck me was the exceptional customer service. Even though I had to wait a while to get helped, the whole transaction was very professionally done. And after a short delay, I was on my way --with a free battery replacement. Why? Because they told me that my old, defunct battery was not up to their standards.

[GlobalGiving]

The South Must Take Action on Global Warming

The conventional wisdom is that global warming is being caused mostly by the developed world (the "North"). It therefore falls on the North, from both a moral and a practical standpoint, to take the major action needed to slow global warming. According to this view, developing countries (the "South") should be allowed to sharply increase their own emissions because they need to grow economically to reduce poverty.

This view is wrong, according to a new paper by David Wheeler and Kevin Ummel of the Center for Global Development. Wheeler and Ummel show that the South already account for 40% of carbon in the atmosphere, and that the South already produces more new carbon emissions each year than the North. By about 2030, the total cumulative carbon emitted by the South will exceed that of the North.



Wheeler and Ummel find that even if the North sharply reduces or even stops its carbon emissions, the emissions produced by the South alone will cause catastrophic climate change. This means that it is in the South's own interests to immediately begin reducing its own carbon emissions.

This finding, if confirmed, is a game changer. The South is no longer simply a victim that needs help adjusting to the climate changes wrought by the North (though it will still need that). Instead, the South must take an active role along the North in reducing emissions - and if it fails to do so, we are all sunk. This presents a new challenge for foreign aid and philanthropy in the coming period.

[GlobalGiving]

In defense of micro-credit (and job creation, and health, and ...)

A recent article by James Suroweicki in the New Yorker argues that micro-finance has become over-hyped. Suroweicki concludes that micro-finance is not the binding constraint because it does not create new jobs. Instead, developing countries need more small and medium-scale enterprises (SMEs), which are the source of most job creation in the developed economy. So we should focus on SMEs instead.

After working in the international development field for over twenty years, I can tell you I have heard this argument many, many times before. Not the specific content of the argument, mind you, but the structure of the argument.

When I began my first job at USAID in Manila in 1984, SMEs were a big part of the aid program, and John, the head of the SME department, wanted even more resources. "SMEs create jobs, and jobs create wealth - can't you guys understand that?" I remember him yelling during a strategy meeting.

The only problem was that his program was not particularly effective. He was spending tens of millions of dollars, but it turned out that creating small enterprises was a lot harder than people thought.

All of 23 years old, I thought I was more enlightened. After studying the experience of other countries, I concluded that new small enterprises arose only when agriculture production was great enough to generate the incomes needed to create demand for non-food products. When I finished that analysis, I began arguing vociferously that we should put of all USAID's resources into agriculture. I was sure that this was the way to go. Regrettably, I had to leave Manila to return to grad school before the final decisions were made...

My experience at USAID was a harbinger of things to come in my subsequent fourteen years at the World Bank, working in countries such as Niger, Indonesia, and even Russia. A small group of people would do an analysis that showed that "X" was the key to growth and development, and that without major investment in "X" the country would stagnate. ["X" might be health, education, transportation, integrated rural development, water, or financial sector development, including micro-credit.] Then, voila, the aid program would be adjusted to spend far more money and expertise on "X".

After a few years (usually about three) it became clear that programs focusing on "X" were not a panacea. Most often, the aid programs did not produce a whole lot of "X." Sometimes the programs succeeded, but alas, more X did not seem to have the expected effect. In any case, there would then be more studies and a big strategy session, and we would conclude that now the country desperately needed "Y" to develop. The cycle started again.

After many cycles of this, two things became clear to me.

First, there is no single "X" that will lead to economic development. Countries instead need some combination of A,B,C and X, Y, Z. And the needed combination of those things is not static- it changes over time.

Second, individual experts, and even organizations staffed by experts are unable to guess (much less promote) the right combination of A,B, C, X, Y, and Z that a country needs at any given time.
Expert-driven mechanisms lack the information and feedback loops needed - and they also lack the bandwidth. I had really smart colleagues in the World Bank, and I can tell you we worked very, very hard. But in the end there were only 24 hours in the day and our heads often felt like they would explode if we try to absorb more information or do more analysis.

Here is the conclusion I drew from my experience: only well functioning markets can make the right decisions about the allocation of resources that will lead to growth. And by markets, I don't mean only financial markets, though they are important, or markets in physical goods. I also mean political markets, where regular citizens' voices are heard (democracy is a political market). And well functioning educational markets allow students to pursue their interests and gain the knowledge and skills needed to get productive jobs. The list of markets goes on.

Markets serve the critical function of allowing people to express the many different things they need and want. And then they allow other people, companies, organizations, and even government agencies to hear those needs and try to satisfy them.

Markets are not a panacea. They often don't function well and sometimes they misallocate resources and have booms and busts. But we simply have not discovered any other system that works better.

Sometimes people ask me what I think the highest impact projects on GlobalGiving are. Health projects? Education projects? Micro-credit? Small business and job creation? I tell them that there is no answer to that question. Whether a project is good depends on whether individual people or their community representatives say they need it, and whether they can raise the sources needed to implement it. Find a project that resonates with you, I tell my friends, and just jump in.

See two earlier posts related to aid markets and microfinance here and here.

[GlobalGiving]

Welcome BRAC!

"I am wondering whether you would consider adding BRAC projects to GlobalGiving?"

Would we?! We would love to. That is what I told my friend Susan Davis on the phone a couple of months ago. She was calling to say that she was helping BRAC launch an enhanced US presence.I get a lot of calls like this, but few that make me so happy. In my view, BRAC is one of the absolute best community-based NGOs operating in the world today. Founded in Bangladesh 1972, BRAC has helped millions of people better their lives through training, education, health programs, and job creation. They have recently expanded their programs to Afghanistan, Sri Lanka, Pakistan, Tanzania, Uganda and Southern Sudan.

I like BRAC's programs and impact, but I also like its high "impact-to-ego ratio." The organization's DNA comes from its founder, Fazle Abed. His exceptional competence is matched only by his modesty and quiet sense of humor. No grandstanding or flashy speeches with Fazle Abed - just quiet action, on a large scale, with a smile.

BRAC has two projects in Sudan listed on GlobalGiving. Check out this one: you can fund a child's entire education for a year for only $100. And what's best is that you know BRAC will be there to oversee the education and other services the child needs to grow up to be healthy, happy, and prosperous.

[GlobalGiving]

Giving Challenge Results are In...

Check out the results of the America's Giving Challenge, backed by the Case Foundation, promoted by Parade Magazine, and implemented by GlobalGiving and Network for Good.

Earlier I blogged about how the Challenge was promoting the democratization of philanthropy. There were many great stories emerging from the Challenge that demonstrated this. Since I love pulling for the underdog, I want to share the following story about the fundraiser who won second place in the global competition:

Erin Kelly, a junior at University of Mary Washington in Virginia,
wrote to GlobalGiving on January 19th asking if she could participate in the Challenge. Erin is a member of Students Helping Honduras, founded by another UMW student after a trip organized by a campus association. Erin wanted to fundraise for a project providing fuel efficient cook stoves, addressing indoor air pollution – the fourth most lethal killer in the developing world (after malnutrition, unsafe sex and lack of safe water and sanitation).

When Erin contacted GlobalGiving, there were less than two weeks to go in the contest. Worse, the leading fundraiser had already mobilized almost 1,000 donors. GlobalGiving team member Manmeet Mehta told her that the odds of winning were slim, but that she was welcome to try if she was willing to pull out all stops.
Erin’s fundraiser was set-up and listed on the site on Jan 22nd, a mere nine days before the competition ended. She and her colleagues responded with amazing enthusiasm, a clear strategy and a flurry of activity. They mobilized their networks and encouraged those networks to reach out to other friends and family.

Erin and her friends rapidly raised hundreds of donations. They constantly refreshed the “Leaderboard” on the GlobalGiving site to check their status. Amazingly, they were soon among the top ten fundraisers. But the deadline was fast approaching, and they needed to be in the top four to win a $50,000 prize. The other fundraisers were collecting donors at an ever-faster clip as the deadline grew near. So Erin and her friends poured it on: they held phone-a-thons for four days straight, emailed all their contacts again, and used instant messenging and Facebook to mobilize students at other campuses including Virginia Tech, William&Mary, and Christopher Newport.

When the final bell rang on January 31 at 3 pm EST, Erin Kelly and her friends were in second place, having amassed more than 1600 donors. They were exhausted but elated: between the donations they raised from friends and the Case Foundation prize, they would be able to provide more than $70,000 in funding to the cook stove project. These funds will improve the health and well being of hundreds of families, especially pregnant women and children. In addition, Erin’s group is now listed with GlobalGiving and can fundraise from around the world on a year-round basis.

[GlobalGiving]

We don't have it in stock, but they do.

In the financial markets, there are rules that if a particular exchange is unable to execute an order, they must route that order to a competing exchange immediately.

This is from a nice blog post by Sean Stannard-Stockton. He points out that in the nascent philanthropic financial markets, there is no obligation to re-route donors to another philanthropic exchange under similar circumstances.

At GlobalGiving, we have informal agreements with a number of other exchanges, and we do refer donors to partners when it makes sense. This helps us meet our pledge to donors that they will be satisfied with their experience at GlobalGiving. It also helps our partners grow, and it generates goodwill for all involved, which pays off over the long term.

Together with a loose coalition of other philanthropic exchanges from around the world, we have been exploring whether it makes sense to develop a formal inter-operability framework. This framework might include common standards and the ability to automatically fulfill donations referred by other exchanges.

Sean is right: making the non-profit social capital market more effective means that this type of collaboration needs to be accelerated.

[GlobalGiving]

Underdog Giants beat Patriots

In one of the biggest upsets in Super Bowl history, New York shattered New England's unbeaten season 17-14 Sunday night as Manning hit Plaxico Burress on a 13-yard fade with 35 seconds left.

I have to admit I was pulling for the underdog. But still, who would have ever thought?

[GlobalGiving]

Underdogs winning America's Challenge

Here is a nice article from Stephanie Strom in today's NY Times about the dynamics behind the America's Giving Challenge. Strom notes that "Fledgling charities...are among the leading contenders for prizes in an experimental online fund-raising contest."

The Challenge is backed by Case Foundation and Parade Magazine, and is being run by GlobalGiving, Network For Good, and Facebook. The Challenge, which ends at 3 pm today, is awarding prizes to those causes that can mobilize the largest number of online donors.

Strom points out that smaller (often newer) organizations are often outmaneuvering the larger, more established organizations, with much better results. For example, Amnesty International had raised only $540 as of Wednesday, while a group of former Peace Corps Volunteers called Friends of Burkina Faso had raised over $21,000 from over 1,300 donors. Atlas Service Corps, another new group, is at the same level, and a few other small groups have mobilized even more donors and money. Even a UNC student has raised over $6,000 from 380 donors for scholarships for Latino students.

The point is not that the smaller groups are necessarily better than the larger, more established groups. The point is that this online giving Challenge is leveling the playing field for all concerned, including the underdogs. The underdogs include international groups, which have typically received only a small portion of philanthropy. They are doing exceptionally well in the Challenge relative to their traditional share of the pie.

Well functioning online giving marketplaces create a more level playing field by reducing the marginal cost of marketing well below the costs of direct mail and other traditional methods, and by increasing transparency about where the money is going and the impact it makes.

This is an important development in the non-profit sector, which has been characterized by sluggish innovation in the past. As I noted in an earlier post:

The non-profit sector faces a number of challenges that both inhibit growth and impede allocation of resources to their best use. Consider the following. Of the Fortune 500 companies that started among the top ten in 1990, only three remained in the top ten by the end of the decade. Open competition meant that successful newcomers displaced the rest.

But in the non-profit sector, the picture was reversed. Seven out of the top ten non-profits not only stayed in the top ten but increased their share of the market during the decade. So much for competition! And according to Jed Emerson and Paul Carrtar, only 6% of non-profits accounted for four fifths of all revenues in the sector.

[GlobalGiving]

GlobalGoodness...

Check our our new GlobalGiving Team Blog called "GlobalGoodness."

It features posts from GlobalGiving team members on many topics. Most recently, Saima wrote about the situation in Pakistan and Kenya and Kevin proposed a Donor Bill of Rights.

Soon we will begin featuring guest posts by people whose insights and views we think you will like.

So check it out, and subscribe below to get notified when new posts are made.

Subscribe by Email
(email address)

Preview | Powered by FeedBlitz

You should have two long-term objectives in college

A couple of days ago I was reflecting on how aimlessly I wandered through high school, college, and even grad school. I had no plan, and no idea how to think about my coursework (or even about my life, to be honest). I did well grade-wise because my older brother was very smart and I wanted to emulate him.

What I wish I had had, in retrospect, was someone to help me put it all in context, and in particular to help me balance the competing demands of what is fulfilling and what is needed to make a living.

Today I ran across a blog post by Paul Gowder that I wish I had read in 1979. Its relevance goes well beyond what to do in college. Here is an excerpt, but there is much more, and it is funny as well as serious. (He promises that a future post will be entitled "So you went to law school; how to get out of this mess.")

You should have two long-term objectives in college. The first is to learn what you love and try to make a life where you can be personally fulfilled and hopefully contribute something to the rest of the world, be it in art, in politics and community service, in knowledge, or (even) in wealth. The second is to handle the economic realities of the world and maximize your human capital to enable you to meet your material needs.

PS: I got this link from the same older brother....

[GlobalGiving]